Lyla Lindsey
Australia and China have been at odds in recent years due to rising trade tensions. In 2023, China bought $219 billion, or 32.5% of Australia's total exports worldwide, while the US only made up 6% of Australia's export sales. This puts Australia in a delicate position as the US imposes high tariffs on Chinese imports. Australia has rejected China's offer to team up against these tariffs, with Prime Minister Anthony Albanese stating that his government would not retaliate. Australia's relationship with China is further strained by its proposed strategic reserve of critical minerals, including rare earths, lithium, and cobalt, which China currently has significant control over in terms of refining and supply.
| Characteristics | Values |
|---|---|
| Australia's total exports to China in 2023 | $219 billion (32.5%) |
| Australia's export sales to the US in 2023 | 6% |
| Tariff on Chinese imports to the US | 145% |
| Tariff on US imports to China | 84% |
| Tariff on Australian imports to the US | 10% |
| Australia's proposed reserve includes | Rare earths, lithium, cobalt |
| China's share of global rare earth refining | 90% |
| Australia's share of global lithium mining | 33% |
| China's share of global lithium mining | 23% |
| China's share of global lithium refining | 57% |
| Australia's first rare earths processing plant operator | Lynas Rare Earths |
| China's stance on trade negotiations | "Win-win" outcomes, "mutual respect", "sincerity" |
| US-China trade war impact | Damaged US credibility, including with its allies |
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What You'll Learn
- Australia rejected China's offer to team up against Trump's tariffs
- China controls 90% of global rare earth processing, tightening export controls
- China bought 32.5% of Australia's exports worldwide in 2023
- China's ambassador to Canberra lambasted Washington's approach to global trade
- Australia's Prime Minister Anthony Albanese rejected China's proposal to join hands
Australia rejected China's offer to team up against Trump's tariffs
Australia has rejected China's proposal to work together against President Donald Trump's tariffs. In response to Trump's 90-day pause on tariffs for countries worldwide, excluding China, Australia's Deputy Prime Minister Richard Marles stated that Australia would not be "holding hands with China in respect of any contest that is going on in the world."
Trump's 90-day pause on tariffs applies a baseline 10% tariff to countries like Australia, while China faces an increased tariff of 125%. According to the Australian Department of Foreign Affairs and Trade, China bought $219 billion, or 32.5%, of Australia's total exports worldwide in 2023, while the US made up just 6% of Australia's export sales. This puts Australia in a delicate position amid escalating trade tensions between the US and China.
Despite the potential risks to Australia's economy, Prime Minister Anthony Albanese has stated that his government would not retaliate against the US tariffs. He previously criticised Trump's decision to impose a 10% tariff as "not the act of a friend" and claimed it had "no basis in logic." Albanese's proposal for a strategic reserve of critical minerals is aimed at protecting Australia and its partners from strategic adversaries like China.
Australia's rejection of China's offer aligns with its intention to diversify its trade and reduce its dependence on China. Deputy Prime Minister Marles emphasised that Australia would pursue its national interests by strengthening trade ties with other regions, including the European Union, Indonesia, India, Britain, and the Middle East.
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China controls 90% of global rare earth processing, tightening export controls
Australia is unhappy with China due to a variety of reasons, including China's dominance in the global rare earth processing industry and its tightening export controls.
China controls around 90% of the global rare earth refining industry, which is crucial for making rare earths usable in technology. This gives China significant control over the supply of these minerals, and has led to concerns from Western governments, particularly as diplomatic tensions with Beijing have increased.
In response to Trump's sweeping tariffs on Chinese imports, China has tightened its export controls on rare earths, further restricting access to these critical minerals. While Australia also has rare earth reserves, it is heavily dependent on China for refining these minerals, and is expected to continue this dependence until at least 2026.
To reduce this dependence, Australia has proposed creating a strategic reserve of critical minerals, including rare earths. This proposal is aimed at protecting Australia and its partners from strategic adversaries like China, and providing Australia with the ability to sell its mineral reserves to help lower prices on global markets and loosen China's control over setting prices.
In addition to Australia's efforts, the US Department of Defense (DOD) has committed significant funding towards building domestic supply chains and heavy rare earth processing facilities. However, it is recognized that developing mining and processing capabilities takes time, and the US will likely continue to rely on China for rare earths in the near future.
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China bought 32.5% of Australia's exports worldwide in 2023
Australia's relationship with China has been strained by a number of factors, including trade tensions and strategic rivalry. In 2023, China bought $219 billion, or 32.5%, of Australia's total exports worldwide. This made China Australia's largest export market by far, with the United States, in comparison, making up just 6% of Australia's export sales.
Australia's exports to China in 2023 were driven by strong resource export volumes and commodity prices. Iron ore, for example, accounted for almost 60% of Australian goods exported to China over the year to May 2024. Services exports to China, concentrated in tourism and education, have been improving but have yet to return to pre-pandemic levels.
The importance of the Chinese market for Australian exports has placed Australia in a difficult position amidst rising trade tensions between China and other countries, notably the United States under the Trump administration. Trump imposed steep tariffs on Chinese imports, ranging from 125% to 145%, while exempting Australia from similar measures. This put Australia in a delicate situation, as it relied heavily on exports to China but also sought to maintain strong ties with the US and other Western countries.
Alicia García-Herrero, chief economist for Asia-Pacific at Natixis, noted that Australia's proposed strategic reserve of critical minerals could serve as a tool to counter China's control over the market during economic tensions. By selling its mineral reserves, Australia could help lower prices on global markets and loosen China's grip on setting prices.
The complex dynamics between Australia, China, and other key players in the global economy highlight the challenges faced by nations in navigating trade relationships and strategic alliances in a rapidly changing geopolitical landscape.
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China's ambassador to Canberra lambasted Washington's approach to global trade
Australia's relationship with China has been strained in recent years, with the two nations butting heads over trade and economic policies. In 2020, China's ambassador to Canberra, Cheng Jingye, criticised Australia's economic dependence on China, warning that Chinese consumers might boycott Australian products like wine and beef if relations remained strained. This marked a new low in the diplomatic relationship between the two countries.
In 2024, China's ambassador to Canberra, Xiao Qian, addressed the issue of US President Donald Trump's plan to impose additional tariffs on Chinese imports. Xiao Qian lambasted Washington's approach to global trade, stating that China and Australia should not jeopardize their national priorities for the sake of a third party. He emphasised the interdependence between China and Australia, highlighting that China is the major importer from Australia and that Australia relies on China as its biggest market.
Xiao Qian's comments reflected a belief that Canberra-Beijing ties should remain strong and unaffected by US trade policies. He urged patience and a focus on bilateral relations between China and Australia, acknowledging the benefits that their two-way trading partnership has brought to both countries.
However, Australia has found itself in a delicate position, caught between its largest trading partner, China, and its strategic allies, such as the US. In response to Trump's tariffs, China reached out to Australia, inviting them to join forces against the US. Australia, however, refused to partner with Beijing, despite the potential economic benefits.
Australia's Prime Minister, Anthony Albanese, rejected the idea of teaming up with China against the US. He criticised Trump's decision to impose tariffs, calling it "not the act of a friend." Albanese's proposal for a strategic reserve of critical minerals, including lithium and cobalt, further underscores Australia's desire to protect itself from overreliance on China and safeguard its economic interests.
The tensions between Australia and China extend beyond trade. Australia's lobbying efforts to exclude Chinese telecommunications giant Huawei from 5G network build-outs within the "'Five Eyes' security and intelligence collective, which includes the US, UK, Canada, and New Zealand, have also caused significant displeasure in Beijing.
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Australia's Prime Minister Anthony Albanese rejected China's proposal to join hands
Australia's Prime Minister Anthony Albanese has rejected China's proposal to 'join hands' and team up against US President Donald Trump's tariffs. Trump has imposed a 10% tariff on Australian imports, but China, which bought $219 billion or 32.5% of Australia's total exports worldwide in 2023, was excluded from the 90-day pause on tariffs.
In response to Trump's tariffs, Albanese said that Australians would "speak for ourselves". He also stated that the tariffs had no basis in logic and were not the act of a friend. However, he made it clear that his government would not retaliate. Albanese's proposal to create a strategic reserve of critical minerals like lithium and cobalt, of which Australia is a top producer, is seen as a way to protect Australia and its partners from strategic adversaries like China.
Alicia García-Herrero, chief economist for Asia-Pacific at Natixis, commented that Albanese's plan was "more sophisticated" than previous proposals as it included the ability to sell Australia's resources at moments of economic tension. Australia is also looking to lessen its reliance on China and diversify its trade with other countries.
The US-China trade war has been a top priority for Albanese's government, with Treasurer Jim Chalmers stating that the government would prioritise dealing with the "dark shadow" of the issue. Albanese himself has acknowledged the global uncertainty and said that Australians had voted for "unity rather than division".
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Frequently asked questions
Australia is displeased with China's offer to team up against Trump's tariffs.
Trump has imposed tariffs on China in response to the country's ""lack of respect" for the global economy.
Australia has rejected China's offer to join hands, with Prime Minister Anthony Albanese calling the tariffs "not the act of a friend".
Australia's trade relationship with China has put the country in the middle of rising trade tensions. In 2023, China bought $219 billion, or 32.5% of Australia's total exports worldwide.
China has tightened export controls on critical rare earth elements, escalating its tariff standoff with Washington. China has also portrayed itself as a defender of free trade, with Xi Jinping stating that there are "no winners in tariff wars or trade wars".
